How much of my savings should go into an annuity?

There is no percentage that answers this without knowing the rest of your picture. What it depends on: what your fixed expenses are, what other income you have coming, how much liquid you need for the unexpected, and how long the money must last. We work that out before naming a figure, and the number is often smaller than people expect.

Can I use IRA money to fund an annuity?

Yes. What changes are not the product but the tax treatment, which follows the money that funded it. See the next question.

What is a fixed indexed annuity, and how does it work?

It's a contract with an insurance company. You place a sum with them, and they credit interest based partly on the movement of a market index. Your money is not invested in the index itself. In a period when the index falls, the index-linked crediting is zero rather than negative. In exchange for that floor, your upside is limited by a cap, a participation rate, or a spread, and taking money out early can trigger surrender charges. The NAIC Buyer's Guide for Deferred Annuities defines each of those terms in plain language. Everything the contract promises rests on the financial strength and claims-paying ability of the company that issued it.

For scale: LIMRA put 2025 fixed indexed annuity sales at $127.9 billion, a fifth consecutive year of growth for the product line.

How is money taxed when I take income out of an annuity?

It depends on how the annuity was funded. If you fund it with money that's already been taxed, withdrawals generally come out earnings first, and those earnings are taxed as ordinary income rather than at capital gains rates. If you fund it inside an IRA or another pre-tax account, distributions are generally taxable as ordinary income. Withdrawals before age fifty-nine and a half can carry an additional 10% tax on top of that, which the IRS sets out in Topic no. 558, with the full treatment in Publication 575. We're not tax professionals, and this is a conversation to have with your CPA alongside us.

What is a cap, a participation rate, and a spread?

Three different ways a contract limits how much index movement gets credited to you. A cap sets a ceiling. A participation rate credits you a percentage of the index move. A spread subtracts a set amount from it first. Which one your contract uses, and at what level, is the single biggest factor in what it will pay. The NAIC Buyer's Guide for Deferred Annuities defines each one in plain language.

What happens if I need the money before the surrender period ends?

You get it, and it costs you. Most contracts charge a surrender fee that declines each year, and many allow a free withdrawal of a set percentage annually without one. Before anything is placed, you see the surrender schedule year by year, because the honest version of this product includes what it costs to get out of it.

What happens to an indexed annuity when the market drops?

For that credit period, the index-linked interest is typically zero rather than a loss. That is not the same as earning money, and it's not the same as your balance being untouched. Contract charges and any optional riders you've added still apply, and they can reduce your value in a flat year. The floor is a real feature, and it has a real price: caps and participation rates mean you also don't capture the full move in strong years.

What does "guaranteed** lifetime income" mean, and who is doing the guaranteeing?

The insurance company that issues your contract. Not a government agency, not the market, and not us. Any income guarantee is backed by that company's financial strength and its ability to pay claims, which is why the choice of carrier matters as much as the choice of product. When we bring you one, you'll get the company's name and its financial strength ratings alongside it.

**Guaranteed lifetime income available through annuitization or the purchase of an optional lifetime income rider, a benefit for which an annual premium is charged.  Annuities are long-term, tax-deferred vehicles designed for retirement and contain some limitations.

Do I still need life insurance if my kids are grown and the house is paid off?

Sometimes the answer is no, and you will hear that. Where it stays useful: replacing income a spouse still depends on, covering a tax or estate cost so heirs are not forced to sell something, evening things out among children when one is inheriting a business, or a policy whose cash value is now doing a job worth keeping.

What's the difference between indexed universal life and a fixed indexed annuity?

They do different jobs. Indexed universal life is life insurance: its primary purpose is a death benefit for the people who depend on you, and it may build cash value over time. A fixed indexed annuity is an accumulation and income contract, designed to hold money and eventually pay it back out. They're taxed differently, they're priced differently, and owning one is not a reason to own the other.

Can I keep the policy I have and just change how it is used?

Often, yes. An in-force illustration shows what the existing contract will do going forward, and sometimes a beneficiary change, a premium change, or a different use of the cash value gets you where you want to go without buying anything. Replacing a policy you already own is a decision with real costs and it should be the second option considered, not the first.

Does my will control who gets my life insurance?

No. The beneficiary designation on the policy controls it, and it overrides what your will says. This surprises people, and it is the reason a divorce, a remarriage, a death in the family, or a new grandchild is worth a form review rather than an assumption.

How is a death benefit taxed when my children receive it?

Death benefits received by a beneficiary are generally not includable in gross income, per the IRS. Any interest paid on top of the benefit is taxable. Depending on how the policy is owned, the benefit may still count toward your estate, which is a question for your attorney rather than for us.

How does a buy-sell agreement get funded?

Commonly with life insurance on each owner, so that when one dies the surviving owners or the business have cash to buy the departing share at the price the agreement already set. Without funding, the agreement names a price and leaves everyone to find the money, which usually means a loan or a sale.

When does life insurance make sense for a family business owner?

We find that three situations come up repeatedly. Funding a written agreement between owners, so that when one exits there's money to buy their share instead of a forced sale. Covering the loss of the person the business genuinely can't run without. And evening things out among children when one of them is taking over the business and the others aren't.

What is key person coverage, and who needs it?

Coverage on the person the business would struggle to replace, payable to the business rather than to a family. It buys time: to recruit, to reassure a lender or a large customer, and to keep payroll running through the gap. Owners tend to think of themselves first and forget the one employee who holds a relationship or a capability nobody else has.